About N7tn of the N9.99tn pension fund assets has been invested in the Federal Government securities by Pension Fund Administrators.
Latest data from the National Pension Commission also showed that the PFAs raised their investment in infrastructure to N40.52bn as of November 30, 2019.
The N7tn invested in the Federal Government securities represents about 70.88 per cent of the total pension fund assets.
The figures are contained in a PenCom report obtained by our correspondents on Tuesday.
An analysis of the data showed that while the Federal Government’s securities took a huge chunk of the pension assets, state government bonds and corporate bonds took the balance of 29.12 per cent.
A breakdown of the figures showed that the highest amount of N4.86tn was invested in the Federal Government bonds alone.
This was followed by N2.1tn investment in Treasury Bills, while investment in Sukuk bond, agency bond and green bonds followed with N78.1bn, N10.82bn and N15.64bn respectively.
The N10.82bn agency bond, according to the commission, was invested in two government agencies, the Nigeria Mortgage Refinancing Company and the Federal Mortgage Bank of Nigeria.
The commission in the report stated that the sum of N117.79bn was invested by the PFAs in state governments’ securities.
This is about 1.18 per cent of the total pension fund assets of N9.99tn
For the private sector, an analysis of the report showed that the sum of N535.93bn, representing about 5.36 per cent of the fund, was invested in domestic ordinary shares, while foreign ordinary shares had a total investment of N62.6bn, amounting to 0.69 per cent.
The data also indicated that a total of N40.52bn was invested in infrastructure.
According to the commission, in May 2015, the operators invested N568m in infrastructure and increased this to N1.35bn in December 2015.
It added that the PFAs invested N2.06bn in infrastructure bond in December 2016. The investment rose to N6.86bn in December 2017.
The amount invested in infrastructure as of the end of September 2018 was put at N17.12bn.
Other security instruments where the pension fund was invested are the corporate bonds, N597.45bn, and the supra-national bonds, N4.1bn.
Similarly, the sum of N5.03bn was invested by the PFAs in foreign money market securities; N23.62bn in mutual funds; N224.63bn in real estate; N32.31bn in private equity fund; while cash and other asset investments had N45.14bn.
Given the 2020 plans and strategies unveiled by the Chief Executive Officer of the Nigerian Stock Exchange, Mr. Oscar Onyema for 2020, the stock market has prospects to sustain the positive performance observed since the beginning of this year, writes Goddy Egene
Given the performance of the Nigerian stock market in 2018 and 2019, most investors who are risk averse may decide to wait for some time l before venturing into the market.
Any investor who adopts a wait and see strategy towards the equities market cannot be blamed because significant losses were incurred in last past two years. For instance, the market declined 17.8 per cent in 2018 and 14.6 per cent in 2019. Although, amid the uninspiring performance, some stocks appreciated and still fetched investors positive returns.
However, while some investors are still contemplating whether or not to invest in the stock market, the Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, has no doubt in his mind that 2020 will be a good year. Speaking in Lagos on Monday on the performance of the market in 2019 and out for 2020, Onyema expressed optimism that the market would record a positive performance this year.
He said the market has bright prospects, stressing that market sentiments may be buoyed by a steady and stable recovery in the domestic economy, alongside continued sustainability in monetary policy. “The signing into law of Nigeria’s Finance Bill 2019 and implementation of the 2020 budget may have a positive impact on companies’ earnings as well as consumer spending. Accordingly, the exchange will continue to advocate for business-friendly economic environment, working in conjunction with both the public and private sectors,” he said.
The NSE boss noted that in their aspiration to become a more agile and demutualised exchange, and pursuant to the Securities and Exchange Commission (SEC)’s ‘No Objection’, they will proceed to next steps which include seeking formal approval from their members on their demutualisation scheme.
“We are committed to continually provide clarity on the demutualisation process to our various stakeholders through regular engagements. While keeping an eye on the strategic intent of the exchange post demutualisation, we will continue to leverage our vast network of stakeholders, in addition to developing new strategic partnerships with the goal of delivering better products and services to our customers. As African Champions, we will maintain momentum in executing the NSE’s 2018 – 2021 Corporate Strategy in our efforts to elevate the prominence of Africa’s global financial markets,” he said. Speaking on some of factors that will drive investors’ sentiments in 2020, Onyema said a stable polity and business environment would be key to Nigeria’s success.
“Enhanced focus on infrastructure renaissance and promotion of laws that will support the business environment will be key to Nigeria’s success in 2020. Nigeria moved 15 places from 146th to 131st in the latest World Bank ease of doing business report as such the country has been tagged as one of the most improved economies in the world in terms of doing business reforms. These are positive indicators that will drive investors’ sentiment in 2020,” he said.
Looking Back Looking back at the market performance in 2019, Onyema, said the Nigerian stock market (which declined 14.6 per cent) mirrored the performance of the larger economy, which continued its moderate path of recovery, growing by 2.28 per cent. He added: “From an international investor’s perspective, the Nigerian bourse had to compete with developed and emerging capital markets which saw risk-based assets priced and valued more competitively.
“Capital conducive United States Fed policy enabled foreign investors to economically enhance leverage and seek investment opportunities in their home and adjacent countries, as Africa’s largest economy adjusted to new economic realities. “On the domestic front, investors contended with: the macroeconomic landscape; fiscal and monetary policy direction and a wait-and see attitude given trends in foreign portfolio investors(FPIs).”
Further reviewing the market performance in 2019, Onyema said although the Nigerian Stock Exchange(NSE)’s All Share Index (ASI) posted a negative return of 14.6 per cent to close the year at 26,842.07, the ASI reached a year high of 32,715.20 in February 2019.
“However, the equities market capitalisation increased by 10.55 per cent to N12.97 trillion from N11.73 trillion in 2018, largely due to sustained primary market activities throughout the year, most notably the listings of MTN Nigeria Communications Plc and Airtel Africa,” he said.
Onyema said the NSE indices also posted negative returns during the year with the NSE Consumer Goods Index being the most impacted, declining 20.83 per cent, followed by the NSE Main Board Index and NSE Lotus Islamic Index, which dropped by 20 per cent and 17.87 per cent respectively. According to him, the NSE Insurance Index and the NSE Premium Index were the least impacted, declining by 0.52 per cent and 3.59 per cent respectively.
He disclosed that the equity market turnover decreased by 19.7 per cent from N1.2 trillion recorded in December 2018 to N0.96 trillion in December 2019, noting that the Financial Services Sector, which accounted for over 50 per cent of total activity remained the highest traded in volume and value, as was the case in 2018.
“To support the equity market in 2019, we rolled out various new initiatives such as a new market structure to enhance liquidity and ensure overall market stability alongside efficiency, as well as launched the beta version of the X-Mobile App (a dynamic and user-friendly mobile app) to boost retail investors participation,” he said.
The NSE boss noted that the fixed income product market performed exceptionally well in 2019, as market capitalisation increased by 20.42 per cent to N12.92 trillion from N10.72 trillion in 2018. “Turnover also increased by 389.26 per cent when compared to 2018. Capital raising was dominated by the federal government, being responsible for 60 per cent of bond issuances during the period in a bid to finance fiscal and infrastructure deficits.
“The year 2019 saw the groundbreaking listing of Access Bank Plc’s N15 billion Green Bond, the first of its kind to be issued by an African corporate. We also saw the listing of North South Power Company Limited’s N8.5Bn corporate infrastructure Green Bond, which was oversubscribed by 60 per cent, with firm commitments from twelve institutional investors including nine pension funds. Capital raising by corporates increased by 321.61 per cent with a total of N132.68 billion raised in 2019,” he said.
According to him, in addition to the above accomplishments, the NSE signed an MoU with the Luxembourg Stock Exchange (the largest Green Bond listing platform in the world) at the World Federation on Exchanges (WFE) conference held in Singapore. “The MoU is geared towards promoting cross-listing and trading of Green Bonds in Nigeria and Luxembourg. We believe relationships of this nature, which foster co-opetition, further enhances our ability to deliver greater value to our stakeholders,” he said.
In the Exchange Traded Fund (ETF) market, he said they saw the listing of Greenwich Alpha ETF from Greenwich Asset Management Limited which tracks the NSE 30 index. “Despite the 61.37 per cent decline in trade volumes, 46.43 per cent fall in turnover, there was a 7.43 per cent increase in market capitalisation to close the year at N6.58 billion. The best performing ETF was the NewGold ETF as it returned 31.75 per cent indicative of the shift towards more stable investment securities.
“Also, to optimise investors returns, we partnered Afrinvest Securities Limited to launch two new factor indices: the NSE-Afrinvest Banking Value Index and NSE
“Afrinvest High Dividend Yield Index. Similarly, we partnered Meristem Securities Limited to launch the NSE-Meristem Growth Index and NSE-Meristem Value Index to provide a benchmark for the market to gauge the performance of value stocks and growth stocks listed on the NSE,” he said.
Onyema said despite challenges faced, they continued to execute on the NSE’s 2018 – 2021 Corporate Strategy, geared towards: enhancing the customer experience across the value chain; re-organisation for success and capitalizing on mission critical strategic initiatives.
“During the year, we continued to enhance our product portfolio, orchestrated groundbreaking investment forums and listed some of Africa’s largest companies,” he said. “Looking at some of the milestones recorded in 2019, the NSE boss said they facilitated the restitutions and recoveries of shares worth N1.436 billion and also worked with securities lending agents to develop a securities lending pool currently worth about N1.07 billion.
“The NSE launched: X-Mobile App to boost investors’ participation; investor relations data pack to enhance issuers’ stakeholder engagement and mutual fund trading and distribution platform to enhance the retail customer experience,” he added.
On market development, he said the exchange hosted interactive session in collaboration with Coronation Merchant Bank to spur growth in the insurance sector.
“The NSE also hosted an interactive session with stakeholders in the Consumer Goods Sector to discuss the role of the capital market in unlocking value in its sector. We also held the inaugural edition of the Islamic Finance in Nigeria (IFN) forum in partnership with REDmoney Group to harness the Islamic Finance Sector for infrastructure development and economic growth. We equally organised fixed income trading workshop and retail investor coverage workshop to enhance the capacity of dealing members and increase investors participation from various investment classes,” he added.